New 2017 Compliance Requirements For Federal Contractors


Compliance RequirementsLast February, I shared 
what was on the horizon for federal contractors in 2017. At the time, 2017 seemed like a long ways away. But here we are: in the first days of the new year. These new requirements for federal contract employers are the law, at least for now.

The paid sick leave requirement is now in effect.

Employees on federal contracts will earn up to 56 hours of paid sick leave per year. The leave is accrued at the rate of 1 hour of paid leave for every 30 hours worked on federal contracts. The leave can also be frontloaded with employees starting the year with a lump sum of 56 hours of paid sick leave. Employees hired after January 1 receive a pro-rated amount of hours.

In most cases, existing PTO policies of federal contract employers broadly satisfy the leave requirement. However, there are a few quirks to watch out for:

  • Carry-over – Federal contract employees must be able to carry over any unused paid sick time into the following year up to 56 hours.
  • Certification – Employers may only require a doctor’s note for an illness or injury when the absence lasts three or more days. And the employer must allow employees 30 days from the first full workday missed to obtain medical documentation. 
  • Usage – Employees must be allowed to use paid sick leave in 1-hour increments rather than 4- or 8-hour increments.
  • Rehired employees – Employers are not required to pay out accrued, unused sick leave upon termination.  However, unused sick time must be reinstated for employees rehired within 12 months.  Employers can elect to pay out accrued sick leave upon termination and would not have to reinstate the accrued time when rehiring. 

Paycheck Transparency

Federal contract employers also have a new requirement on pay transparency. It probably sounds familiar. The 2016 pay transparency requirement prohibits adverse employment actions against employees who inquire, discuss, or disclose their compensation or the compensation of others.

This year’s paycheck transparency which went into effect on January 1st,  requires federal contractors to provide a “wage statement” each pay period containing:

  1. Total hours worked in the pay period;
  2. Total hours that were overtime hours;
  3. Rate of pay for hours worked;
  4. Gross pay for the pay period; and
  5. An itemized list of deductions or additions from gross pay.

Although most payroll statements provide hours worked and overtime hours as a default, you would be well advised to check on rate of pay.

Bonus – Independent Contractor Notification

Another 2017 requirement is a notice provided to independent contractors to inform of their status

The rule requires the notice be in writing and provided before the work begins and be separate from any independent contractor agreement between the Contractor and the individual.
These 2017 requirements were imposed by Executive Orders (EO) signed by President Obama. It remains to be seen whether the new Trump administration will void any of the Eos.  In the meantime, contractors must be aware of the new requirements and consider them law, for now!

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